The effect of quota on national welfare

Question 1

What is the effect of quota on the national welfare of a small country?

Answer 1

= -(b+c+d)
Amount of deadweight loss

=> National welfare deteriorates when quotas are applied: free trade is better

Question 2

Is tariff or quota better from the viewpoint of national welfare?

Answer 2

• Quota: -(b+c+d)
• Tariff= -(b+d)
  => Tariff is better than quota from the viewpoint of national welfare